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2018 board DEC / JAN roomMagazine of the Institute of Directors in New Zealand THREE SENIOR DIRECTORS SHARE THEIR VIEWS ON THE EMERGING ISSUES FOR 2018 CONTENTS A note from the editor. As 2017 winds down, eyes are already turning to 2018. In this issue, the IoD's Governance The Agenda Leadership Centre (GLC) identifies the top DECEMBER / JANUARY 2018 five issues directors should keep front of mind over the next 12 months (page 8). INSIDE IoD Drawn from feedback to our 2017 Director Sentiment Survey (page 22) and BoardRoom details a review of the major issues globally, the five 04 issues identified present a New Zealand- 05 CEO letter focused agenda for the coming year. 08 Trust and confidence heads the list. 06 UpFront The GLC recommends boards foster transparency and engagement with 36 GLC update stakeholders in order to build and sustain business legitimacy. 43 DirectorVacancies Up next, ethical behaviour is an ongoing focus for directors, and boards need to set 44 Out & about the tone from the top. A growing trend globally, shareholder 46 Events diary activism is the third item to which boards should be, and in many cases are, turning FEATURES their thoughts. The GLC advises that DIRECTOR SPEAK / Three effective engagement with shareholders senior directors share their 08 Top five issues for is the best starting point for meeting views on issues for 2018 directors in 2018 shareholder expectations. and Director Speak Another challenge voiced by members in our Director Sentiment Survey is access 16 Turning an eye to Asia to skills and talent. Boards in 2018 will need to be aware that skill shortages put the 22 Director Sentiment onus back on organisations to find ways 16 Survey: Stakeholder to train and retain effective staff. interests top of mind Lastly, data governance presents a for boards challenge to directors. The imperative is to help their organisations realise the benefits 26 Customers before of modern data collection techniques technology while ensuring personal information is 32 Anti-money laundering appropriately protected legislation As General Manager GLC Felicity Caird says, 2018 will be a year in which boards TURNING AN EYE TO ASIA / 34 Meet our emerging will need to think beyond compliance in Exploring opportunity and risk directors assessing risks and the drivers of business in China and India sustainability. 38 Making a difference: NFPs and the Governance with Aaron Watson Purpose programme Acting BoardRoom editor 26 FROM OUR PARTNERS 14 A global perspective / Marsh 20 Cyber security / Aura BoardRoom is the magazine CUSTOMERS BEFORE of the Institute of Directors 24 The road ahead: TECHNOLOGY / Melissa in New Zealand corporate responsibility iod.org.nz Clark-Reynolds talks reporting in NZ / KPMG disruptive business models December / January 2018 3 BOARDROOM DETAILS board BOARDROOM IS PLEASED room SENIOR LEADERSHIP TEAM TO ACKNOWLEDGE THE Chief Executive Officer SUPPORT OF Kirsten Patterson BoardRoom is published six times NATIONAL PARTNERS a year by the Institute of Directors General Manager, Members in New Zealand (IoD) and is free Nikki Franklin to all members. Subscription for General Manager, Governance asb.co.nz Leadership Centre 0800 803 804 non-members is $155 per year. Felicity Caird BoardRoom is designed to inform General Manager, Corporate Services marsh.co.nz and stimulate discussion in the Chris Fox 0800 627 744 director community, but opinions expressed do not reflect IoD policy General Manager, Commercial Kirsten Ralph NATIONAL CYBERSECURITY unless explicitly stated. PARTNER COUNCIL 2017/18 Liz Coutts, President; Alan Isaac, Vice President; aurainfosec.com EDITOR Dr Helen Anderson, 04 894 3755 Aaron Watson Wellington; Des Hammond, +64 470 2647 Bay of Plenty; Julia Hoare, [email protected] Auckland; Jackie Lloyd, NATIONAL SPONSORS Wellington; Simon Lockwood, Please contact the editor for any advertising queries. Waikato; Vincent Pooch, Canterbury; Geoff Thomas, Otago Southland; Clayton chapmantripp.com INSTITUTE OF DIRECTORS IN NEW ZEALAND (INC) Wakefield, Auckland; Sarah- 04 499 5999 Mezzanine Floor, 50 Customhouse Quay Jane Weir, Nelson Marlborough PO Box 25253, Wellington 6146 New Zealand Tel: 04 499 0076 COMMERCIAL BOARD Fax: 04 499 9488 Kirsten Patterson, Chair; [email protected] Liz Coutts, Alan Isaac, kpmg.co.nz iod.org.nz Dr Alison Harrison 09 367 5800 The Institute of Directors has staff based at the National Office in Wellington, an office in Auckland BRANCH MANAGERS PRODUCTION NOTES and eight branches. For National Office, phone For a full list of branch Every effort has been made 04 499 0076. managers, see page 47. to guarantee the pages of this magazine are sustainably sourced and produced using paper that meets the environmental BOARDROOM IS PROUDLY DESIGNED BY standards shown below. eightyone.co.nz 04 894 1856 When you have finished with this magazine, please recycle. 4 BOARDROOM CEO LETTER 01 What it means to do well and do good sustainable organisations. giving 0.7% of GDP to others. The contribution that NFPs Recently, I was invited to talk For NFPs, every little bit helps, to the Public Relations Institute and giving money or time helps make to New Zealand’s of New Zealand on what it these organisations stay afloat. economy is so significant means to “do well and do good”. A recent report by Jo Cribb The opportunity to step back called Governing for Good: that it is beginning to rival and think about the NFP sector The Governance Capacity of other sectors. as a whole got me thinking. How NGOs interviewed 36 board well are we doing at doing well members across 12 NGOs and and doing good? identified many challenges. Tēnā koutou katoa At first glance, our NFP NGOs cited difficulty attracting sector is hugely productive. and retaining good talent for As we approach the end of New Zealanders are big on their boards, particularly when the year, thoughts turn from giving, and we have a vibrant based in the regions. The the activities and achievements NFP sector that contributes biggest challenge still for NFPs of the year to reflections on a significant amount to our was securing funding, with the achievements and on economy. 76% saying it was the greatest our contributions to NZ Inc. A report published last year concern for their organisation. KIRSTEN PATTERSON Inevitably, reflections over the by Statistics New Zealand on While there are a lot of donations CEO, INSTITUTE OF DIRECTORS summer holidays also turn the size of the NFP sector found going into the NFP sector, to any new year’s resolutions NFPs contributed $6 billion to funding is still concentrated for 2018. the economy in 2013, and more in the largest NFPs – 89% For many of us, not-for- than 1.2 million New Zealanders of the income for the sector profit (NFP) involvement will contributed to the sector as was controlled by just 11% of be on our list of new year’s volunteers. That’s almost the organisations. resolutions – 51% of our the population of Auckland Strengthening governance members are engaged on engaged in doing great things in this sector is a great step NFP boards, many of them for other people. in addressing some of these balancing their corporate or Two charities are established challenges. Volunteering your state sector efforts with the every day in New Zealand, and governance skills is often more desire to contribute to their more than 114,000 organisations valuable than money. Every communities. For many of us are engaged in the NFP sector. contribution by individual reflecting over the Christmas The contribution that IoD members to better NFP break, the question will be how NFPs make to New Zealand’s governance makes a difference. we can contribute in our NFP economy is so significant Ahakoa he iti he pounamu roles better. that it is beginning to rival – although it is small, it is As the CEO of an NFP, other sectors. In 2013, this greenstone. I’m enormously grateful to contribution was 3% of our GDP, A special thank you to all the many volunteers who help but when volunteer labour is of the IoD volunteers around the IoD promote excellence counted, this rises to 6%. the country both at council in governance. We are so There’s little doubt that us and branch level. fortunate to have so many Kiwis are hugely passionate Safe and happy holiday people who understand how about NFPs. According to the season everyone! good governance benefits Charities Aid Foundation, 01 Read more about NFPs and the Governance with Purpose New Zealand as a whole New Zealanders are the second Ngā mihi programme on page 38 by building stronger, more most generous in the world, Kirsten (KP) December / January 2018 5 UpFront APPOINTMENTS Hilary Poole Chartered Member, Alan Clarke has been appointed Chartered Fellow, has to the boards of Sport been appointed to New Zealand and High the board of Cavalier Performance Sport Corporation New Zealand Murray Donald James Sclater Chartered Fellow, has Chartered Member, has been appointed to the been appointed to the Farmlands Co-operative board of TeamTalk board of directors Erin Currie LOOKING TO THE FUTURE Christine Grice has been appointed Chartered Fellow, has chair of the Medical As we head into 2018, what might our world look like in the future? been reappointed to Technology Association Consider the insights produced by Future Agenda below: the Council for Legal of New Zealand (MTANZ) Education Miriam Deans James Ogden has been appointed to A CONNECTED FUTURE DWINDLING RESOURCES Chartered Fellow, has the board of the Real Today, over 3.3 billion people 1.6 equivalent planets been appointed chair of Estate Institute of are connected to the internet, of resources consumed MMC fund administration New Zealand and at our current rate, an extra each year 1 billion are being added every 3 years How do we manage 11 billion people with the Predict 50 billion SIM cards same amount of water Q: Can a robot be in use by 2025 as for 1 billion? director of a New Zealand company? A GROWING AND AGEING SHIFTING POWER AND A: No.